Steffy: City, state in circus of corporate welfare

Published 9:47 pm, Tuesday, March 20, 2012

Apparently, while I was gone last week, the circus came to town - the economic development circus, that is.

NBC Sports Group recently leased 32,000 square feet in the Houston Pavilions for a local studio. Like most companies looking to open an office in a new city, it arrived with its hand out. As the Chronicle's Nancy Sarnoff reported, NBC wanted $2 million in city and state incentives for its Comcast SportsNet Houston, a regional sports network that will broadcast Rockets and Astros games.

Even though the network had "Houston" in its name, NBC planned only a small operation here with the rest run from its offices in Stamford, Conn. Rockets and Astros officials asked the city if it could come up with some incentives that would persuade NBC to set up a local studio, Andy Icken, the city's chief development officer, told me.

As with any good circus, this one has three rings, and this is the first: a network wants to broadcast local games without a local studio, and team owners, no strangers to lapping at the public trough, convince the city to use taxpayers' dollars to do the teams' bidding.

The second ring of the circus comes at the state level. NBC wanted $1.2 million from the Texas Enterprise Fund, the taxpayer-funded candy store from which Gov. Rick Perry doles out corporate giveaways like Reese's Pieces.

The rules for awarding Enterprise Fund grants are about as rigid as warm tapioca, but in this case, Perry declined to play fast and loose with taxpayer dollars. He had other priorities, but more on that in a moment.

You don't need a blast of seltzer water to the face to know what happened next. NBC came back to the city and asked for a sweeter deal. The city kicked in $250,000 in tax abatements on top of the $750,000 abatements it had already offered, bringing the total to $1 million. That's the most the city felt was justified based on estimates of NBC's projected tax revenue, Icken said.

The Enterprise Fund, in addition to its other shortcomings, has become a liability for local governments. It's created a corporate expectation that cities must essentially guarantee if the state doesn't come through.

That's clearly what happened in this case. The mere potential of an Enterprise Fund grant provided NBC with the leverage to extract more money from the city. The city then had to decide if giving away additional tax revenue was worth the studio and its 125 jobs.

"We have to make a decision of how much we can afford to do," Icken said. "We found it desirable, and we went as deep into our pockets as we felt we could go."

Meanwhile, no sooner did the state reject NBC's request than the Enterprise Fund pledged $21 million over 10 years for Apple to expand its operations in Austin, which brings us to the third ring of this shameful show.

The governor's office is so proud of the deal, which purportedly will create 3,600 jobs, that its home page on Tuesday bore the Apple corporate logo with a Texas flag superimposed on it.

"Investments like this further Texas' potential to become the nation's next high-tech hub," Perry crowed in a statement.

Although the Enterprise Fund was originally conceived as a pile of money for luring new businesses to the state, some of its biggest grants have gone to longtime corporate citizens - Texas Instruments, Vought Aircraft, Lexicon Pharmaceuticals, and now Apple.

At the same time it was strong-arming the state, Apple was trying to figure out what to do with a cash hoard of almost $100 billion. Apple's cash on hand is bigger than Texas' $80.6 billion general revenue budget for the 2012-13 biennium. On Monday it said it will spend $45 bil-lion of its cash to pay its first dividends in 17 years and to buy its own stock in the open market.

In other words, Apple may be the last company in America that needs, let alone deserves, taxpayer largesse.

None of that matters under the big tent of corporate welfare, though. The economic development circus is a rigged game in which companies crack the whip, local governments do tricks, and the state works the crowd to pick taxpayers' pockets.